Importance of Financial Ethics:
- Investor Protection in Financial Ethics:- In Financial Ethics, investors would never entrust their money to someone who is unethical, doing so may result in heavy fines. The finance and accounting professionals are entrusted with the duty to provide an assurance to the investors regarding the creditability of financial information of a business enterprise in Financial Ethics. If the finance and accounting professionals do not behave ethically, the investors would be at a great risk of being cheated.
- Past accounting scams:- In the recent past, many corporate scams have come to light, like WorldCom, Enron and satyam. These scams have shaken the confidence in finance and accounting professionals and Financial Ethics. Financial Ethics is required on the part of the professionals so as to restore the confidence of the public at large towards them again.
- Stock markets:- In Financial Ethics, every fraud has a negative impact on the investors as well as on the stock markets. If the finance and accounting professionals do not conform to ethical behavior, it would surely result in more and more accounting frauds and scams resulting in negative market sentiments, there would be downfall in the stock market, thus it will surely hamper the growth of economy of that particular country.
- Public interest in Financial Ethics:- In Financial Ethics, the workingof finance and accounting professionals affects, not just one individual, department or organization, but it affects all the stakeholders, the public at large and the confidence of the general public in the corporations. The profesiionals are expected to serve in public interest. The finance and accounting professionals must carry out their duties diligently ignoring their personal interests.
- Punishment for vendors:- In Financial Ethics, strict disciplinary actions would be taken against the violators because if unethical behavior is not punished, code of conduct and training programs are useless.
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